Effect of inflation on future housing prices

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[quote author="no_vaseline" date=1240912300]Who said anything about inflation? I'm with Mish - this is an oversupply problem, totally deflationary. Have you seen my milk thread?



I also think interest rates are going to the moon.



Interest rates =/= inflation.</blockquote>
How could interest rates go to the moon (especially short term rates) if there is significant overcapacity in the system and the world economies have no growth?
 
At some point, investors are going to demand risk premium.



The US gmnt. is borrowing at a torrid rate, and with the structural deficits to come in SSI and Medicare.............do you disagree?
 
[quote author="no_vaseline" date=1240926938]At some point, investors are going to demand risk premium.



The US gmnt. is borrowing at a torrid rate, and with the structural deficits to come in SSI and Medicare.............do you disagree?</blockquote>
I do agree with you. Sooner or later something will have to give...either we stop/slowdown the lending or pay higher rates. Not sure what longer-term rates will be in the next few years but short-term rates will remain low for at least the next few years.
 
[quote author="no_vaseline" date=1240926938]At some point, investors are going to demand risk premium.



The US gmnt. is borrowing at a torrid rate, and with the structural deficits to come in SSI and Medicare.............do you disagree?</blockquote>


Why Mr. No_Vas, how diplomatic you have become.
 
[quote author="IrvineRenter" date=1240897696][quote author="no_vaseline" date=1240895749]What happens to RE values when interest rates start bumping 10% (in the bag) or 15% (maybe) or 18% (I'm in Awgee territory now)?</blockquote>


<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object></blockquote>


Better lock in that 4.5% rate now.
 
[quote author="awgee" date=1240946037][quote author="no_vaseline" date=1240926938]At some point, investors are going to demand risk premium.



The US gmnt. is borrowing at a torrid rate, and with the structural deficits to come in SSI and Medicare.............do you disagree?</blockquote>


Why Mr. No_Vas, how diplomatic you have become.</blockquote>
It's the new kinder/gentler Mr. No_Vas. haha
 
[quote author="asianinvasian" date=1240970259][quote author="IrvineRenter" date=1240897696][quote author="no_vaseline" date=1240895749]What happens to RE values when interest rates start bumping 10% (in the bag) or 15% (maybe) or 18% (I'm in Awgee territory now)?</blockquote>


<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object></blockquote>


Better lock in that 4.5% rate now.</blockquote>


Think I could lock it in for, say, three and a half years?



That contaiminated water they pipe into that cesspool Villages of Columbus is pickling what little is left of your brain.
 
[quote author="no_vaseline" date=1240985175][quote author="asianinvasian" date=1240970259][quote author="IrvineRenter" date=1240897696][quote author="no_vaseline" date=1240895749]What happens to RE values when interest rates start bumping 10% (in the bag) or 15% (maybe) or 18% (I'm in Awgee territory now)?</blockquote>


<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object></blockquote>


Better lock in that 4.5% rate now.</blockquote>


Think I could lock it in for, say, three and a half years?



That contaiminated water they pipe into that cesspool Villages of Columbus is pickling what little is left of your brain.</blockquote>
The funny thing is that is a derivative out there that would allow you to buy a rate lock forward to lock in that 4.5% rate 2-5 years out. Problem is that you better have some deep pockets if rates move against you (go lower) because you'll be writing big checks to keep the counterparty at bay. I remember I had a borrower at BofA (a RE developer) who picked up a forward against a construction loan to lock in a low perm loan rate 2 years out after the property was built and stabilized. Well, rates ticked up 18 months later and the borrower sold the property so he had to unwind the forward for a hefty $2MM profit in addition to the big gain from the sale of the property.
 
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